Oliver Wyman: Financial Services

Outlook for Global Wholesale & Investment Banking

Oliver Wyman — Tuesday, March 16, 2010 5:34 AM GMT

2010 will be a pivotal year for investment banks. With global securities markets undergoing profound cyclical and structural change, the key question in the minds of investors and managements is how far regulation and the economy will challenge profitability and how the industry will be reshaped. Will the core of regulated banks disappoint, and non-banks and scale players seize a disproportionate share of industry profits? Who will be the winners and losers? This Morgan Stanley-Oliver Wyman research project seeks to explore the outlook, range of outcomes and implications for the leading Wholesale and Investment banks, as well as the wider implications for exchanges, IDBs and asset managers. Although the industry conclusions are largely joint, any stock-specific or valuation considerations solely reflect the views of Morgan Stanley Research, not Oliver Wyman.

Why 'Too Big to Fail' is Too Short-Sighted to Succeed

Oliver Wyman — Wednesday, February 24, 2010 10:10 AM GMT

This paper discusses why firm size should not be the primary determinant of financial institution systemic risk, and details negative economic consequences likely to result if a sized-based process (i.e. Too Big To Fail or TBTF) is utilized in financial reform legislation. The significant economic costs of a flawed policy based on Too-Big-To-Fail are likely to outweigh any potential benefits associated with the increased regulation of large firms and the planned creation of a systemic dissolution fund. Therefore, financial regulation to address future systemic risk clearly should not be guided by the size of financial institutions , but rather based on the key sources of firm-based systemic risk, including: interconnectedness, cyclicality, leverage, liquidity risk and transparency.

Institutions Need to Better Understand Their Risk Appetite: Joint Report with RMA

Oliver Wyman — Monday, February 08, 2010 4:40 PM GMT

Basel proposal for strengthening the resilience of the banking sector

Oliver Wyman — Wednesday, February 03, 2010 12:41 PM GMT

This report addresses the December 17, 2009 impact of the Basel Committee’s proposals to address post-crisis risk issues, specifically the potential to significantly raise the cost of credit extension to businesses and consumers via the increased capital requirements. Also, the report states that in addition to the higher capital requirements and increased scrutiny of liquidity, other approaches need to be incorporated into the regulatory framework. In addition, there are a number of actions that banks should undertake now that are consistent with the proposals and representative of best practices in risk management.

State of the Financial Services Industry 2010

Oliver Wyman — Tuesday, January 26, 2010 11:40 AM GMT

The intensive care provided by governments and central banks helped most financial institutions survive the crisis of late 2008. They are now in recovery, preparing for life in an uncertain economic and regulatory environment. Following the failure of Lehman Brothers in late 2008, the interbank lending markets seized up. It seemed possible that the banking system would collapse. Governments intervened on an unprecedented scale, providing financial institutions with over US$1 trillion in debt and equity capital. Most survived.
2009 was then devoted to recovery, as will be 2010 and 2011. As with patients recovering from a medical trauma, the process can be broken into five stages.

Wholesale and Investment Banking: State of the Nation Part 3

Oliver Wyman — Wednesday, December 09, 2009 6:44 AM GMT

This is third and final installment of our Wholesale and Investment Banking State of the Nation series, which covers two topics:

Financial Resources: We assess how capital management and balance sheet management need to change in a much more resource constrained environment
Infrastructure: We explore some of the universal infrastructure challenges facing firms in the sector post-crisis, and outline what we see as best practices in terms of prioritization, governance and delivery

Trust Me: I'm Your Private Banker

Oliver Wyman — Tuesday, December 08, 2009 9:13 AM GMT

The report Trust me: I’m your Private Banker focuses on how Private Banks can build trust and long lasting relationships with their clients. We explore a new business model called the True Advisor Bank which addresses, overall, long term profitability, transparency in fee structures and additional services. Not only can the new model help to rebuild trust, it can also combat the emergence of new competition, such as online investment communities.

Change to Consumer Overdrafts: Five Questions to Address before July 1st

Oliver Wyman — Wednesday, November 18, 2009 11:37 AM GMT

On November 12th the Federal Reserve announced changes to Regulation E that will substantially impact practices regarding consumer overdrafts. These overdrafts represent $25 - $30 BN per year in depository revenue. Given the recent regulatory and legislative tone, the amendments are not wholly surprising, and most institutions were already considering strategic options for a future without some of these fees. The timeline, however, has come as somewhat of a shock, with substantial change required by July 1, 2010. Depending on your starting point, this change will likely require significant operational effort across communications, product development, technology and risk management - as well as a continued push towards strategic transformation.

Wholesale and Investment Banking: State of the Nation Part 2

Oliver Wyman — Monday, November 23, 2009 6:18 AM GMT

This article is the second in a three part series on the Wholesale and Investment Banking State of the Nation. Specifically, in this second report, we focus on two realated topics: Re-setting "Organizational Transmission" and Strategy in the face of regulatory and market uncerntainity.

Stressed Out: The Limits of Analytics

Oliver Wyman — Monday, November 09, 2009 11:17 AM GMT

Stress Testing in the banking industry has been under intense scrutiny since the crisis began. Results of analyses have underpinned some of the most significant decisions of the recent turmoil, foreshadowing many multi billion Euro capital injections. The coming years will see continuing demands on banks' Stress Testing capabilities, with results used to inform decisions by governments, regulators and investors alike. We broadly support the direction of this move, but remain concerned that too much faith is being placed in a single technique.

Overview of Oliver Wyman Capabilities: Consumer Protection in Financial Services

Oliver Wyman — Friday, October 30, 2009 3:38 PM GMT

Wholesale and Investment Banking: State of the Nation Part 1

Oliver Wyman — Thursday, October 15, 2009 4:40 PM GMT

This article is the first in a three part series on the Wholesale and Investment Banking State of the Nation. Over the course of the series we will explore the health of the industry, the challenges facing Boards and management teams, some of the solutions as we see them, and the likely future industry architecture.
The full contents of the series are:
1.     Industry context (this article)
2.     Strategy and transmission
3.     Financial resources and infrastructure

HBR Article: Fix Compensation for More Than Just the CEO

Oliver Wyman — Tuesday, October 06, 2009 11:16 AM GMT

Custody 2.0 TARGET2-Securities and its implications for the European post-trade market

Oliver Wyman — Wednesday, September 30, 2009 11:46 AM GMT

Produced jointly by Deutsche Bank's Domestic Custody Services unit and Oliver Wyman, this report is intended to provide a starting point for businesses preparing their own impact assessment following the introduction of regulatory initiative TARGET2-Securities (T2S) project. It describes the planned T2S system and its history, explores the likely implications for various kinds of post-trade market participants, including CSDs, custodians, broker-dealers, asset managers, banks and exchanges, and gives an update on expected changes in the market size of custody services in Europe.

The Complexity Imperative

Oliver Wyman — Wednesday, September 02, 2009 9:11 AM GMT

This paper explores the nature of the underlying business complexity in financial services - how to evaluate and get at it, and how to begin to transform the enterprise into a more flexible and scalable business. Using a case study of a leading consumer finance company that achieved 25% improvement in operating efficiency and 40% in IT, we show how it is possible to make substantial progress in complexity reduction by applying a "front-to-back optimization" approach focused on the drivers of complexity.